Building on a strengthening housing market, Home Depot and Lowe's each recently reported Q2 gains that bucked general shopper trends for traditional retailers, leading many to speculate that the home improvement titans were more immune to current digital pressures, aptly titled the “Amazon Effect.” With Home Depot arguably the stronger performer of the two – I’ve previously detailed the struggles Lowe’s has had in the past with attracting male shoppers as well as with its regional competitor Menards – recent analysis of the digital generation, a.k.a. Millennials, exposes vulnerabilities that Lowe’s in particular faces with this next great generation of spenders.

Let’s first take a look at the standings for Home Depot and Lowe's among Millennial shoppers (born between 1983 and 1998), courtesy of Prosper’s Monthly Consumer Survey of more than 6,000 U.S. adults. Much like the overall trend, Home Depot and Lowe's are the top two retailers shopped ‘most often’ for home improvement (the result of an unaided, write-in question) by this cohort; however, their propensity to shop these retailers lags adults in general.

Home Improvement/Hardware: Shop Most Often, Home Depot Versus Lowe's For Millennials And Adults 18+

Over the past 12 months (September 2015 to August 2016), Millennials have been 7.6% less likely than the overall average to cite Home Depot as their preferred retailer, with the gap shrinking from 9.3% in the preceding year (September 2014 to August 2015). While it appears that Home Depot might be gaining headway with these shoppers, Lowe's faces a much larger deficit: -29.0%. Yes, you read that correctly. Over the past year, Millennials have been nearly 30% less likely to shop Lowe's most often for home improvement compared to the general population. And unlike Home Depot, this current gap hasn’t been narrowing, instead remaining relatively unchanged from the previous year. So, it appears that Home Depot may be growing a steady following of young shoppers, while Lowe’s is lagging severely in this segment – and showing no signs of improvement.

Home Improvement/Hardware Shopper Gap: Millennials Versus Adults 18+

What may be playing into Home Depot’s favor at the moment is the fact that location is a driving factor for Millennials to shop a particular store for their home improvement needs. With a U.S. store count that is about 15% higher than Lowe's, Home Depot certainly wins the odds here. However, this generation is about 20% less likely to rely on location as a determining factor on where to shop than adults in general – so brick and mortar ubiquity might not be a completely sure bet for either of the home improvement giants in the long term.

Not surprisingly, Millennials also have a greater propensity to shop around – and online – for their home improvement needs. Enter Amazon. This past spring, these young shoppers were 55% more likely to have recently shopped Amazon for home improvement compared to the overall average. Additionally, this group is about twice as likely to shop Jeff Bezos’ behemoth ‘most often’ compared to the average. Admittedly, while Amazon doesn’t offer the selection of paint, lumber, and building supplies that place Home Depot and Lowe’s at a distinct advantage currently, it still offers plenty of tools, organization and home storage solutions, décor, and cleaning supplies that one might find at his/her local big box hardware store – enough to turn shoppers’ heads, and wallets, toward the online disruptor’s direction. With its already tenuous ties with Millennials, Lowe's appears to be in a more vulnerable position here than archrival Home Depot.

Why are Millennials so important for the home improvement sector? While we tend to confine this generation to their parents’ homes, apartments, and so-called tiny houses, our research suggests that they are already spending significantly in this category, despite their delayed intentions to purchase a first home. Millennials estimate that they spend about $52 per month within this category, slightly higher than average ($49). Younger shoppers are also clocking a higher 5-year compound annual growth rate on spending (+5.4%) compared to the general population (+4.9%). So, this group certainly has home improvement spending power now that is likely to continue to grow – making them a lucrative segment for retailers to target in both the short- and long-terms. However, with Millennials particularly slow to warm up to Lowe’s within this category (a problem it faces in appliances as well), this weakness is likely to be exposed as a gain to rivals – including Amazon.